Hi @Bilmar and thanks for writing in with your question today!
You are a very kind grandparent to support your granddaughter's educational journey. However, you would only be able to receive a tax benefit for directly paying her tuition in limited circumstances - specifically, if you claim your granddaughter as a dependent on your tax return.
The granddaughter might be eligible to claim education credits, either the American Opportunity Credit or Lifetime Learning credit, based on her attendance at college. Those credits would be claimed by her on her own tax return if she files as a non-dependent taxpayer. If someone claims her as a dependent, that person would claim the credits on their return. So, for example, if your child (the granddaughter's parent) claims the granddaughter as a dependent, they would get the education credits.
The Tuition and Fees deduction was permanently repealed for tax years starting in 2021 and beyond so this is no longer available.
One option you could look into which might provide a limited tax benefit would be to fund a 529 Plan (College Savings Plan) for your granddaughter. You could put money in and, depending on your state and your income level, possibly receive a state tax deduction. Then your granddaughter could withdraw the funds and use them for tuition. Here is a great TurboTax article about 529 plans.
I hope this information is helpful!
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